My View on "Chidu-nomics - the threat within":

Those who are in charge of policy formulation for financial sector will do well to keep in the back of their mind the following observation made by Sukhmoy Chakravarty in 1986: “In a mixed developing economy, there is considerable scope for direct controls for matters which pertain to basic necessities of life. But equally clearly there are major areas of economic life where a variety of indirect methods of regulation may be usefully deployed. I believe that monetary policy is only one amongst these methods of regulations. It is somewhat simple minded and may therefore be misleading to expect a solution to India’s most pressing problems of growth and poverty from any monetary policy, howsoever judiciously devised. But it is even more dangerous to indulge in the feeling that ‘easy credit, low interest rate’ policy contains the major answer to India’s pressing problems of growth, poverty and self-reliance.”(Excerpted from Sir Purushotamdas Thakurdas Memorial Lecture,1986) Sixteen years have not in any way reduced the relevance of the above statement.

- M.G.Warrier

Budget 2013: UPA's fiscal mismanagement has weakened India's economy

.....The political difficulty in rolling back what was meant to be temporary spending to boost a troubled economy made it a long-term challenge to manage the deficit. Former RBI governor Y.V. Reddy highlights the distinction between the structural and cyclical aspects of the fiscal deficit. In his book Economic Policies and India's Reform Agenda, he suggests the stimulus package has become a structural problem. "There is, perhaps, a structural deterioration in the fiscal situation," he writes. "The nature of stimulus has been such that the consumption expenditure and the committed expenditure have increased." In a recent interview with Business Today, he emphasised that a stimulus was something that would be withdrawn. He said: "You have to make a distinction between stimulus [and structural issues] - something you can do now and remove in normal circumstances.".....

Read - Business Today

Call to approve microfinance institutions bill at the earliest

.......The RBI has left it to the discretion of bankers to fix interest rates, but was keen to ensure that customers' interests were not compromised, said R Sandeep, DGM (rural planning & credit), RBI. Women, who availed loans from micro finance institutions, shared their success stories during the convention.

Read - TOI

RBI makes gold deposit scheme more attractive

....It further said the banks would not be required to obtain prior approval of RBI for introducing the scheme. However, they would be required to inform the details of the scheme, including name of branches operating the scheme, to the central bank.......

Read | Business Standard

Will rise in 2013: World Gold Council

......On the report by the committee appointed by RBI to check gold consumption, Mr. Grubb said, “The report is a sober assessment of the Indian gold market. It has recognized gold as an essential asset in the Indian context and the issue is of how to mobilize idle reserves and put it to use. There have been three hikes in import duty and I do not foresee any more action.”.....

Read - The Hindu

RBI tweaks gold deposit scheme provisions

....According to the estimates of K U B Rao Committee, about 20,000 tonnes of gold is lying idle with people. The central bank wants to channelise the idle gold for productive purposes and also check unbridled gold imports. From now on, banks will not need to obtain prior approval from RBI to introduce the scheme. However, they would be required to inform the central bank of details such as the names of the branches that operate the scheme......

Read | Business Standard

RBI cancels licence of Abhinav Sahakari Bank

The Reserve Bank of India (RBI) in an order dated February 1, 2013 has cancelled the licence of Abhinav Sahakari Bank Ltd in Rahuri, Ahmednagar, Maharashtra .................

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Finmin clamps down on Irda

.....Even the Reserve Bank of India had expressed concerns about banks’ role in distributing insurance products under the proposed framework. “The new person who assumes office will have to be responsible for the newly implemented norms and it is fair enough to allow him to review the impact on all stakeholders,” said an industry source. It’s also believed that the post of member actuary at Irda will be filled after the new chairman assumes office. Currently, Purnima Gupta (Appointed actuary at Reliance Life) and Meena Kumari (deputy director – actuarial, Irda) are in the reckoning for the actuary job.........

Read - DNA

A higher exemption limit is the need of the hour

......With a constant decline in the percentage of individual savings, it’s expected that there would be an increase in the exemption limit available under section 80C to `3 lakh from the current limit of `1 lakh, to boost savings. This can be done by introducing a separate limit of `2 lakh for specified long-term investments such as life insurance and annuity, investments in Rajiv Gandhi Equity Savings Scheme and employee contribution to New Pension Scheme, within the ambit of section 80C.......

Read - DNA

CM seeks banks help for state glagship projects

......Although the ratio of priority sector advances to total advances in Mizoram as of March 2012 was well above the stipulated 40 percent, percentage of agriculture advances was much below the RBI mandated target of 18 percent, the CM pointed out. He requested the banks to take proactive steps in devising ingenious ways and adopting innovative strategies to step up the credit flow to priority sector, especially to agriculture sector in the state. The focus of this year's state credit seminar was on "development of rural infrastructure for accelerating inclusive growth." .......

Read...........

SBI opens e-corners in Kolkata

State Bank of India, Kolkata Circle on Thursday opened five e-corners in various parts of the city. The e-corners will have various facilities including ATM, cash deposit machines, self service kiosk (for passbook printing, fund transfer, NEFT, account statement, cheque book request, bill payments etc) and coin vending machine, said a bank statement..........

Read - HBL

Kudos to Mr Subbarao

It was a pleasant surprise to read the headlines in today's Economic Times "The Silent Poor Made Subbarao Hold Rates"  and "People suffering due to high inflation forces RBI Governor D Subbarao to hold Rates.   It was a pleasure to read the article as time and again the whole media, corporate bosses, top bankers had been critical of the RBI Governor's  policy of holding the rates and now comes out the truth. However, we at AllBankingSolutions.com had time and again supported Dr Subbarao's policy even at the expense of some of my close friends being highly critical of my views.................

Read..........

India’s inflation puzzle

...........A couple of weeks ago, Deepak Mohanty, and Executive Director of RBI, gave a speech in which he tackled India’s inflation puzzle. I will outline what he said, and then assess the arguments. Mr Mohanty first pointed out that India’s recent inflation surge and its persistence did not line up well with either its own history or what has been happening contemporaneously in the rest of the world.............

Read - FE

RBI sets up panel to study exporters’ concerns

Committee will be chaired by RBI Executive Director G. Padmanabhan

The Reserve Bank of India (RBI) on Wednesday set up a technical committee to study issues related to difficulties being faced by exporters with regard to the availability of credit and transaction costs, among other areas..........

Read - Mint

Long bankers' queue for Lakshmi Vilas Bank CEO

.......The applicants include senior executives from the State Bank of India, a former official of the Reserve Bank of India, and business heads of ICICI Bank, HDFC Bank, Axis Bank, Citibank and Hongkong and Shanghai Banking Corp. The CEO’s post in the Tamil Nadu-based private bank has been vacant after P R Somasundaram resigned from the position late November last year. He had left the bank due to “personal reasons”.......

Read | Business Standard

The Risk Management Imperative - V.K.Sharma

Read............

Islamic Banking – Participatory, Equality & Indian law

.....Had RBI as financial engineer studied financial products used under Islamic banking system, might have developed new secular financial products with equally attractive and acceptable to Indian Muslims as well. But the internal working group of RBI constituted for this purpose sensed mysticism in Islamic banking with inextricable influence of religious doctrines, and delineated the principles and entire gamut of financial products used in Islamic banking for better understanding. So the report presented by that working groups mostly dealt about legal hurdles disallowing Islamic theology in present banking system; and did not focus on evaluating the scope of alternative financial products potential for financial inclusion.........

Read..........

Banks pump back counterfeit notes to skirt trouble

......A police officer said certain banks were indirectly aiding counterfeiters by pumping the fake notes they catch into ATMs. “They have nothing to gain by alerting the police about the counterfeits. We have information that at least some banks put fake notes into their ATMs. From there some unsuspecting man on the street gets it,” ............

Read - The Hindu

Tortoise treatment

Co-operative banks account for a minuscule proportion of the country’s total banking business and nothing reflects this more than the slower-than-tortoise pace at which the Reserve Bank of India (RBI) sends them orders............

Read | Business Standard

The RBI tightens up

.............. In the short run, the end of regulatory forbearance may lead to an even larger gap between the valuations of private sector banks and those of PSBs. But it is the only road to a healthy recapitalisation of the banking sector.

Read | Business Standard

India Inc and the Big Bank theories

The Reserve Bank of India (RBI) appeared un-consulted when Pranab Mukherjee, the then finance minister, invited new players to set up banks in his Budget speech in February 2010. It surprised many in the central bank because consolidation in the banking sector was the most debated topic in those days. Now, three years on, it is more or less certain that a new set...........

Read | Business Standard

Financial markets can expand only if we tackle financial inclusion first

....."Though Financial Inclusion has remained a national agenda for a fairly long time, as reflected in initiatives such as the co-operative movement, bank nationalization, lead bank scheme, setting up of RRBs, etc., the progress has been nothing to write home about. Why has this been the state of affairs in our country where banking, in some formal way, has been in existence for more than 200 years; where we have several banks which have been in existence for more than 100 years,".........

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This chart shows how FM stole his own thunder before Budget

.............“Focus will now be on Stability, Credibility on fiscal  consolidation and Reform intent in order to reposition India as an attractive investment destination,” the report says. But as the RBI’s recent monetary policy shows, the real challenges lie ahead. The current account deficit is likely to get worse in the third quarter, and if the fourth quarter does not show significant improvement, the RBI will again have to be cautious on rate cuts............

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PSU banks likely to get Rs 20,000 cr fund infusion in next fiscal

.....The RBI has extended the rollout date for Basel III by three months to April, 1, 2013. During the current fiscal, the centre has approved infusion of Rs 12,517 crore in around 10 state- owned banks. It had infused about Rs 20,117 crore in public sector banks during 2010- 11, and Rs 12,000 crore in 2011- 12..........

Read - FPJ

Small rate cuts do not help you save much

..But how much of a difference would this make to equated monthly instalment (EMI) or the total interest payout for the entire tenor? Numbers show that it doesn’t make a huge difference if the loan amount is less. For higher loan amounts, the saving is a little higher.........

Read - Mint

Banking Taken a Hit? Yes. Is It Cause for Alarm? No

.....Today, it is a classic scenario where you have declining industrial production, you have declining top line inflation, you have declining core inflation, you have high consumer inflation no doubt, which  is a supply side issue, and you have some shortage of money supply. In this situation, dynamic growth seems to get a little heavier.  And that is what we are saying, our recommendation is a tough one, it is for the Reserve Bank to decide but we would like to see maybe a 50 basis point cut in the repo rate and a 75 to 100 basis point cut in cash reserve ratio. It would not only change the sentiment, it will bring down interest rates, and will give a fillip to consumer demand. ........

Read - Business Today

Lot for the financial sector happening on the sidelines of RBI guidelines

Lot for the financial sector has been happening on the sidelines in the form of the RBI guidelines that keep on coming from time to time whether it is for the NBFCs, for microfinance and gold loan companies.....

Read - ET

Fake notes via Bengal 'the best'

.....Experts are worried because producers of the fake notes routed through Bengal have managed to replicate all 12 "overt" security features of genuine notes with a scary degree of accuracy. "The paper and ink used are of a very high quality too, making it tough even for experts to detect the fakes," an RBI official who did not want to be named said on Wednesday........

Read - Hindustan Times

‘Pakistan Security Press ink used for fake notes’

The High Court was informed on Tuesday that ink from Pakistan Security Press is being used for printing fake currency notes in the state. State Public Prosecutor S Dorairaj submitted before Justice K N Keshavanarayana that Sampangiramanagar police recovered fake currency notes to the tune of `30 lakh and.....

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Overseas exchanges a fertile ground for fake note circulation

......Though the Reserve Bank of India insists that the currency notes of denomination of 100 and above, circulated by banks, must go through mandatory sorting by machine, the guideline is not adhered to by several banks. RBI has devised a system whereby the currency notes could be checked at the branches or at the currency chest, a regional currency management set-up, operated at a particular office where currency notes are received from various branches. Even if one branch fails to identify fake currency, the machine at the currency chest can detect it.......

Read - The Hindu

Curbing gold imports won’thelp trim trade gap: Sharma

Increasing the import duty on gold alone will not help bridge the trade deficit, Commerce Minister Anand Sharma said on Wednesday, even as the Finance Ministry and the Reserve Bank of India have been taking steps to discourage imports of the precious metal..........

Read - The Hindu

घर की तिजोरी में रखे ‘सोने’ पर RBI की पैनी नजर

........इसके तहत घरों मे बिना इस्तेमाल के पडे सोने को आय के स्रोत मे बदलने के लिए  एक स्वर्ण बैंक के गठन की योजना भी बनायी जा रही है। उसने सरकार को भेजे सुझाव में बैंको को उनके द्वारा बेचे गए सोने के सिक्कों की वापस खरीद का अधिकार दिए जाने की बात भी कही है। आरबीआई ने सोने से जुडे चार प्रकार के उत्पादो को बाजार मे लाने का सुझाव दिया है। इनमे गोल्ड डिपाजिट स्कीम, गोल्ड लिंक्ड एकाउंट, गोल्ड एक्यूमलेशन प्लान और गोल्ड पेशन प्लान शामिल है। हालांकि ऐसी किसी भी योजना मे निवेशको को बैकों में रखे जाने वाला उनका सोना वापिस नहीं मिलने वाला है। ...........

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Is my credit card safe?

.........On 8 February, Reserve Bank of India (RBI) Deputy Governor Anand Sinha told news agency Press Trust of India in Mumbai that instances of credit card fraud being reported were “of high magnitude”. “We have to be alert,” he added. Various explanations have been proffered for the increase in instances of card fraud, including the fact that most overseas websites do not insist on either CVV or the additional “Secure” layer. “In India, while all domestic transactions are authenticated through the Secure protocol, as per an RBI mandate, many international merchants do not use the Secure protocol for ‘card not present’ transactions,” said an HSBC spokesperson. None of these explanations is entirely satisfactory and experts say the current situation reflects the inability of card issuers, banks, the regulator, and merchants to deal with card fraud. No one is safe...............

Read - Mint

Planning for retirement through pension plans?

Among a myriad of financial goals that a person has, retirement perhaps is the most important and long term in nature. No wonder, insurance companies come up with advertisements that harp on how pension plans help create a good retirement kitty. But, even if you start early, pension plans may not give the best returns................

Read | Business Standard

Toothless tigers, wounded elephants

......Yet the similes abound. Three months after the Wall Street crisis, The Economist of London was calling India “An Elephant, not a Tiger”. In 2011, hoping to resurrect India in the eyes of investors, RBI Governor D. Subbarao in 2011 spoke of “Rejigging the elephant dance.” Mixing metaphors merrily, the Governor reminded the audience: “But the elephant dance got interrupted by the ‘zoo party’ of the global financial crisis and to get it back on course, we need to rejig the dance.” We now have RBI Deputy Governor K.C. Chakrabarty titling his speech: “Transit Path for Indian Economy: Six Steps for Transforming an Elephant into a Tiger.”........

Read - HBL

Bank credit not fundamental right, says RBI deputy guv

“You may open bank accounts, you may provide some remittance facilities, you may also provide some emergency overdraft or consumption credit. But, bank credit per se cannot be a fundamental right,”

Read - TOI

Banking as a fundamental right of the people ! - K C Chakrabarty

..............Having said that, I would admit that I have come here with a vested interest. Vested interest in the sense that the subject you have selected for this seminar is very close to my heart; to the hearts of the senior management in the Reserve Bank of India. Also, being in-charge of the administration and human resource in the Reserve Bank of India, which is the regulator of the entire banking system in India, we want a responsible and strong trade union system in the banks because we feel that strong trade unions are a pre-condition for strong managements in the banks. I will come back to this issue a little later. It is, indeed, very heartening to note that the AIBEA has organized this conference on the theme “Meeting the Challenges of the Decade”. In fact, this could very well have been titled “Meeting the Challenges of the Century”. The banking system is unlikely to face the kind of challenges that it has been facing for the last 4–5 years..............

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Inclusion drive taking baby steps

........The department of financial services and the Reserve Bank of India count a wider financial reach as one of their top priorities. They have been pushing banks to open more branches in rural India. Other than this, banks have on their hands UPA’s another pet theme – the direct cash transfer project. “All banks have 24 hours in a day and there is some expectation that the RBI has of them, something that the finance ministry has of them, something the cash transfers or Aadhar has of them. They are trying to cope up,”......

Read - DNA

Faux Pas in RBI Calendar, 2013

The Bank in its 2013 calendar had wrongly stated that “The Kolkata Town Hall” was built in 1913. The history of construction of this heritage building dates back to 1813 A.D. Printouts/publications by RBI or on behalf of RBI have high value in the society and no effort should be spared to make these items error free.

- Kishore Chakraborty, President, All India RBI OERS Pensioners' Forum

What to do when someone palms off a torn note to you

...............The Reserve Bank of India has proper guidelines, namely note refund rules. Banks refund your torn note according to those rules. But, before you show your fist to the banker, keep in mind that getting a refund is not your right. From the RBI’s part, it is just a gracious gesture...............

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Cutting bank interest for senior citizens: Can the FM cut the extra 1% given to bank employees?

Senior citizens, who have no voice, are the soft target for the government. However, the government is not bold enough to withdraw the extra interest of 1% given by banks to their present and past employees, as they have the capacity to shut the doors of banks through agitation and strikes........

.................This is the third time in the last six months that the finance ministry has stepped on the toes of the RBI by giving directives to PSBs on issues that is mainly the prerogative of the RBI. While RBI is keeping a steady silence, what is not desirable is dual control of banks, as this will only weaken the powers of the RBI and serve neither the interest of banks nor of the economy..........

Read - Moneylife

Pune CAB's RetireNet......................'

'Stick'ing to the net

College of Agricultural Banking, Pune is always in the forefront in taking welfare measures for the RBI Retirees. "Interaction with Pensioners"  in the month of November is a proud annual event organised by CAB. In last such event on 1st November 2012, Smt Meena Hemchandra, Principal while addressing the retirees gave a pleasant surprise by announcing that CAB would arrange a "Computer Introduction Workshop" for the benefit of retirees. Keeping its words, CAB conducted a one-day "Introductory / Basic Computer Training Class for Retired Staff Members" on 8th February 2013. Eighteen retirees of different ages including ninety year old (in fact young) Shri B.B.Vedak participated enthusiastically. The participants were enthralled at the introduction of the technique to the use of "Internet" for payments of bills, operation of bank accounts, opening of websites with hands-on experience, a new world about which they had only heard.  The formidable task of teaching these trainees with ebbing physical and mental abilities was handled with all finesse and patience by the Faculty Members S/Shri Sundar Murthy and Pramod Kumar Patel.  All the retirees expressed deep sense of gratitude to the Principal, Faculty Members and the support staff for embarking upon such a novel effort and making excellent arrangements for the same. While thanking the Principal, I look forward to CAB for more such programmes.

- L.V.Kulkarni, Secretary, Reserve Bank Retired Employees' Association, Pune 

Mission nonpareil...........

V feel proud of u......................

Flying high with dedication................

‘RBI issues revised policy guidelines under micro enterprise’

.....Raghubir Singh, LDO, RBI showed his concern on the financial inclusion programme and emphasized the importance GoI is associating with this programme. He further informed that revised policy guidelines have been issued by RBI under micro-enterprise as defined in the MSMED act. In view of the increase in price index and cost inputs, the limit has been revised, within the overall ceiling of Rs 25 lakh. 40% of the total advances to micro and small enterprise .........

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To reduce imports, Security Printing and Minting Corporation of India Ltd, RBI to enhance currency note facility

NASHIK: With an aim to reduce the import of paper for printing currency notes, the Security Printing and Minting Corporation of India Ltd(SPMCIL) is setting up bank note paper manufacturing facilities at Mysore in a joint venture with the Bharatiya Reserve Bank Note Mudran Private Ltd (BRBNMPL), a subsidiary of RBI. The proposed bank note paper unit for manufacturing specially made paper for security printing is expected to start operation by December 2014............

Read - TOI

What’s holding us back from using mobile banking?

If data were to be believed, a lot of you would have graduated from using Internet banking to mobile banking already but a lot of us have still not made the leap. Though the number of transactions through mobile banking increased by 64% in the April-December 2012 period, according to data from the Reserve Bank of India (RBI), 67% of overall banking transactions still happens through cash, according to a 2011 Deloitte-Assocham study. So what’s holding us back from using this mode of convenience in a big way?...........

Read - Mint

Trade unions call all-India strike for Feb 20, 21

.....The functioning of the power and transport sectors, oil industries, the RBI and other banks, insurance firms, posts and telecommunications, and information technology firms would be affected during the strike by the unions, .......

Read - The Hindu

Goa State Co-op Bank in the dock for ‘fraud’

........It may be recalled that NABARD had over the last five years, written strongly worded letters to the bank for its precarious financial position and for following One Time Settlement Scheme (OTS) that was not in accordance with RBI guidelines.........

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Fake notes flood Delhi

..........RBI Governor Dr Duvvuri Subbarao has also expressed his concern over fake currency notes circulating in the country. Speaking in a public outreach programme at Lalpur Karauta village in UP earlier this week he said: "We are facing one more problem and that is of fake currency notes. There are some criminal, unsocial elements who are involved in fraudulent activities. We are also trying to see that the police department is vigilant towards these fraudsters." .................

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Now, produce a movie with one rupee only

At a time when headline inflation is close to7%, a rupee may not fetch you much but it will certainly give you a chance to co-produce a movie.  You can now contribute as less as one rupee and become a co-producer of Kolkata based filmmaker's independent film―Diamonds In The Sky.............

Read | Business Standard

Lending Rates Need to Come Off for a Rebound

......This buttresses our view that growth is unlikely to bottom out unless lending rates come off. It is for this reason we expect the RBI to continue to ease liquidity via open market operations (OMO) or a 25 basis point cash reserve ratio (CRR) cut on March 19. It should also cut policy rates by another 50 basis points by June. This, in turn, should pull down lending rates by an additional 75 basis points by March 2014, atop the 50-75 basis points cut this fiscal. ...........

Read - ET

ICAI, RBI to soon discuss accounting standards for banking cos

Accounting regulator ICAI will soon hold discussions with the Reserve Bank of India (RBI) on implementation of IFRS standards by banking companies. The Institute of Chartered Accountants of India (ICAI) has also submitted a tentative roadmap for IFRS implementation to the Corporate Affairs Ministry...........

Read - HBL

Deepening India’s bond markets

.........The Chakravarty committee of 1984 had recommended HTM only to protect banks from large capital losses on their SLR holdings, in the event of interest rates rising with its recommended move to market rates. Today, we are seeing two-way movement of interest rates. Yet, fears about the impact of removing HTM on bank balance sheets and on government borrowings continue to be voiced. The SLR, as the Narasimham Committee had pointed out, is meant only to satisfy a prudential requirement and not a government financing function. The new Basel III regulations will not allow it to be used for both. RBI Executor Director V.K. Sharma recently noted how a large IRS (interest rate swaps) market has developed, which is, however, dominated by foreign banks. They account for 80 per cent of notional principal amount outstanding here, whereas the public sector banks have barely a 2 per cent market share.......

Read - HBL

Chidu-nomics - the threat within

......Two stains on his UPA-I years were liberal use of off-Budget special subsidy bonds to make the official fiscal deficit look better than it was and the infamous farm loan waiver. Also, Mr Chidambaram initially resisted the sage advice of the Reserve Bank of India (RBI) to restrict foreign borrowing by Indian companies. In the end, however, the then RBI Governor Y V Reddy got his way and saved India from a financial earthquake that could have dwarfed the 1991 crisis........

Read | Business Standard

Why Chidu and Subbu do not have much control over fiscal defici

.......What this entire story tells us is that the likes of P Chidambaram and D Subbarao have far lesser control over the Indian economy and the fiscal deficit of the government, their attempts to prove otherwise notwithstanding. So as long as the Western world continues to print money, prices of oil and gold will continue to remain high. Hence,  Indians will continue to buy gold and the oil bill will continue to remain high.

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New Bank Chiefs’ NPA Obsession seen Eroding Profits

...........“Perhaps bank chairmen want to take tough decisions very early in their tenure so that they can show good results progressively,” ..............

Read - ET

Ill-behaved Indian borrowers will now find it tough to hide from authorities

....... Even some young borrowers, such as students, default, in their first relationship with a bank. Today, gross NPAs in education loans are over seven per cent of advances. As that number is rising, banks are going slow on education loans. Former finance minister Pranab Mukherjee had even proposed a credit guarantee fund to compensate the banks, but it never materialised for lack of budgetary allocation. RBI Deputy Governor K.C. Chakrabarty highlighted the problem of student loan defaults during a lecture at the Noida-based JRE School of Management last year. "I suggest school alumni associations should become active in inculcating ethics and values among students," he said........

Read - Business Today

Sen Likely to Take Over as NSC Chief

.......The appointment comes at a time when the Central Statistics Office is facing criticism from the finance ministry for supposedly underestimating economic (GDP) growth numbers.............

Read - ET

People suffering due to high inflation forces RBI governor D Subbarao to hold rates

"I have sympathy with that view (that high interest rates was hurting growth). I am not saying that's an invalid criticism. But I just want to say that their voice is heard, but people who are hurt by inflation - the large majority of the poor - their voice is not heard." 

Read - ET

At 7.2 % inflation is still high, says RBI Governor

Ahead of the January inflation readings later this week, Reserve Bank Governor D Subbarao on Monday said the price rise index which slowed to a three-year low of 7.18 per cent in December, is “still high.” “If you take the macroeconomic context today, you find that growth has moderated, inflation has come off the peak, but even at 7 plus per cent, it is still high,” he said while addressing the convocation of the RBI-promoted Indira Gandhi Institute of Development Research here...............

Read - The Hindu

Subbarao warns of record current account deficit

Reserve Bank Governor Duvvuri Subbarao on Monday cautioned the country was headed for the highest ever current account deficit this fiscal, after it rose to 5.3 per cent of GDP in the second quarter. “Last year, CAD was 4.2 per cent of GDP, but this year we expect it would be significantly higher than that. It’s going to be historically the highest CAD measured as a proportion of GDP,” the Governor said, though he refrained from giving any figure............

Read - The Hindu

K.N. Raj’s services recalled

......Dr. Raj, who hailed from Thrissur, made a name for himself computing India’s balance of payments for the first time for the Reserve Bank of India (RBI) and being a co-author of and writing a foreword to the First Five Year Plan document. Dr. Raj played a major role in raising India’s rate of savings. He and his colleagues drew up a 20-year perspective of increasing the rate of savings from 5 per cent in 1950-51 to 20 per cent by 1970-71.............

Read - The Hindu

Banning GDP

.......Take corporate taxes which have fallen, from 3.8% of GDP in FY08 to a budgeted 3.7% of GDP in FY13—the actuals could be even lower due the fall in India Inc’s profitability. Even more important is the likely impact on the current account deficit that the RBI Governor has said will be even higher in Q3 than it was in Q2 when it touched a record 5.4% of GDP...........

Read - FE

HC dismisses petitions against AP MFI Act, state unlikely to repeal Act

......"The challenge of the Act by MFIs has been dismissed. Therefore, the AP MFI Act stands," said Reddy Subrahmanyam, principal secretary with AP's rural development ministry, the man behind the controversial Act. He said the court has advised the state government to review its MFI Act in the light of the central MFI bill and the RBI circulars that may address the concerns of the AP government on protecting the borrowers' interests.........

Read - ET

Failure of Fixed Income Derivative Markets in India - Nachiket Mor

I was recently made aware of a fascinating speech on this topic given by Mr. V. K. Sharma (ED, RBI) in Mumbai on November 8th, 2012. In this speech he takes the example of three fixed income derivative contracts and examines why all three of them have failed to live up to their original expectations. He concludes his speech by making some important recommendations on what might be done to redress these failures...........

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Stir will cripple life: Dasgupta

.....Mr. Dasgupta said the general strike, called by all the 11 recognised central trade unions against the ‘anti-people economic policies’ of the Central government, would be the largest such agitation in the country. “It is for the first time that a 48-hour general strike is being called after Independence,” he said. It would cripple the functioning of all strategic industries, including telecommunications, posts, banks, insurance, and transportation, though the Railway unions were not joining the strike.........

Read - The Hindu

Working class urged to unite to evolve pro-poor policies

.....Mr. Veeraiah who inaugurated the ninth conference of the All India NABARD Employees’ Association on Sunday attributed the present crisis facing the economy to the political-official-industry nexus. The Central government that doled out concessions to the rich and influential, amounting to Rs.5.22 lakh crore tax exemptions, was trying to do away with subsidies for poor and working class, he said......

Read - The Hindu

Banking Penetration

The RBI governor D Subbarao, during his Guwahati visit on Wednesday was informed by the Assam Chief Minister Tarun Gogoi regarding the low credit–deposit (CD) ratio in North–East India vis–à–vis the rest of India. The CD ratio in Assam is indeed very dismal given the fact that the CD ratio, despite improvements being effected stand at 46.6 per cent in September 2012 as compared to the national average of 76.6 per cent. Gogoi urged the RBI governor to introduce a system of incentivizes and disincentives for the banks whose CD ratio fell below 40 per cent................

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Banks yet to comply with norms on dormant accounts

...........As on December 31, 2011, a total amount exceeding Rs.2, 481 crore was lying as unclaimed deposits in 1.1 million accounts of various banks in the country, according to the RBI. On a modest estimate, at least Rs.100 crore could be remaining idle in banks operating in Kerala. RBI officials said the apex bank had not extended the deadline, but a circular was issued as a follow-up to all banks to review the position by September 30, 2012. Most banks have complied with the norms, an official said...........

Read - The Hindu

Making banking a basic right

Bank unions have a crucial role to play in making banking a fundamental right. Unions are no longer adversaries of bank management, they are equal stake partners............

Read - The Hindu

Avoid arbitrary pricing of banking products & services, says RBI’s Chakrabarty

..........Banking services are now available in over two lakh villages, but about four lakh villages still have no access to the services. Banking services can be extended to un-banked centres in both rural and urban areas by leveraging on technology, he added. Arbitrary pricing of banking products and services must be avoided to bring these within the reach of the common man, he emphasised..............

Read - HBL

Banking reforms leave cooperative banks in the lurch

The banking sector reforms in the country may gradually kill cooperative banks in Kerala, feel experts. Amendments to the banking law, coupled with the new bank licensing policy of the Reserve Bank of India (RBI), pose a serious threat to the mass banking concept in the country, and particularly the state...........

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Despite concerns, India to let corporates into banking

............India will soon allow corporate houses to open banks despite misgivings within the Reserve Bank of India (RBI) as well as the International Monetary Fund that it could lead to risky loans if newcomers succumb to the temptation of lending to their related firms........

Read - REUTERS

Entry of new banks will promote healthy competition, says PNB chief

.....The Reserve Bank of India might soon come out with its final guidelines on new bank licences, said Punjab National Bank Chairman and Managing Director K. R. Kamath.

The entry of new banks into the system would encourage healthy competition, thereby benefiting customers, he said......

Read - HBL

A roundup of mobile banking apps for small businesses

......Today, mobile banking (m-banking) has become a credible mode to transact for a large number of small businesses. A number of private and government banks have introduced mobile banking applications, as they compete for small business customers who demand more user friendly and convenient services on their handheld devices. According to a recent report from the Reserve Bank of India (RBI), 13 million people used m-banking services in the fiscal 2012. 49 banks were involved in 25.6 million m-banking transactions that were valued at Rs.1,820 crores in the same period..............

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Banks can open A/cs for Bangladeshi nationals sans RBI nod

....."...it has been decided that henceforth, banks would be permitted to open NRO account of individual/s of Bangladesh nationality without the approval of the Reserve Bank," it said in a notification. The permission is granted subject to the conditions the bank should satisfy itself that the individual holds a valid visa and valid residential permit.............

Read - ET

LuLu group chief Yusuffali MA seeks RBI nod to buy 4.99 pc stake in Catholic Syrian Bank

........The proposed transaction will help Chanrichawla to bring down his holding in CSB closer to the 10 per cent cap set by RBI, from 18 per cent he currently owns. "I'm not a banker and I have no intention to control the bank... But if RBI allows, I will consider buying another 3 per cent," Yusuffali told ET over telephone. As on March 31, 2012, the bank had an asset base of Rs 12,047 crore and recorded a net profit of Rs 25.9 crore. ...........

Read - ET

'12 lakh PAN holders haven't filed returns'

Concerned about meeting the tax targets, the finance ministry has once again trained its guns on tax defaulters. While urging taxpayers to disclose their true income, the income tax departments has warned that it will be taking stern action against over 12 lakh PAN holders who have not filed their returns.............

Read - IE

Policy paralysis at Reserve Bank of India?

There are critical issues on which the RBI and govt differ but should it take three years to sort them out?

........The RBI first released a discussion paper in August 2010 and a year later, in August 2011, it issued the draft guidelines on new bank licensing, seeking public comments. Since then, it has been in discussion with the finance ministry to prepare the final guidelines. With general elections a year away, more delay in finalizing the guidelines diminishes the chances of issuing any licence this year. One wonders who is suffering from policy paralysis—the RBI or the finance ministry?..........

Read - Mint